New Moves in Search Engine Advertising

Many people who handle SEO also must consider search engine advertising on one level or another. This article covers some different approaches to search engine advertising from Yahoo! and MSN. It leads off, however, with a small company that thinks outside the box when it comes to keyword search ads.

If you have placed keyword-related ads with search engines before, you know that it operates like an auction. Take Google AdWords, for instance. These ads are displayed next to search results for particular keywords. For keyword-targeted ads, advertisers specify the maximum amount of money they’re willing to pay for each click, and only pay when someone clicks on their ad. For site-targeted ads, advertisers pay for each 1000 impressions regardless of whether the ad is clicked or not.

Either way, if you want to get the top spot for your ad – which will give you the most views and, theoretically, the most success for your advertising campaign – you face a lot of competition. To quote from Google’s FAQ about how such ads are ranked: “Having relevant keywords and ad text, a high CPC [cost per click], and a strong CTR [click-through rate] will result in a higher position for your ad. Because this ranking system rewards well-targeted, relevant ads, you can’t be locked out of the top position as you would be in a ranking system based solely on price.”

Nevertheless, the maximum cost-per-click plays an important role in where your ad will appear. And some words may go for upwards of $40. Is there a way to reach your target audience without busting your bank account?

A year-old start-up company in Mumbai, India, believes it has the answer to this problem. Named Pinstorm, the company’s team offers its clients a combined 35 years of experience in online marketing. Its international scope is already breathtaking; its search marketing reaches across 13 languages and 204 countries. Its magic formula, if it can be called that, would be familiar to Apple fans: think differently.

The company created a software program and a set of services designed to unveil the less obvious – and therefore less expensive – keyword choices that clients can use to get their ad in front of their target audience. As a result, they spend less money than their competitors, but reach nearly the same people. To make this work, it helps to engage your imagination a bit more about exactly what terms your target customer might put into the search engine.
Let’s suppose for a moment that you have an inexpensive hotel in New York, and you want to get your ad in front of out-of-state tourists. You could bid on the obvious, “cheap hotel New York,” but you’ll find that bidding on that keyword phrase runs several dollars. What else would an out-of-state tourist search for? Perhaps terms such as “NY subway map” or “Statue of Liberty” might go into the search engine as well. They may not be as directly related to booking a hotel as the other terms – but they also cost mere pennies.

This is only a small scale example. Pinstorm CEO Mahesh Murthy can cite much more extreme examples. Staying in the hotel field, for example, he has seen keywords that sell for $45 per click. “If you convert five percent of the visitors, the cost per sale is $900. It makes no sense to spend $900 to sell a $300 hotel room. There are huge inefficiencies in the bidding process,” he pointed out in an interview with Reuters.

It is worth looking at typical search engine advertiser behavior to better understand the dynamic, and what Murthy’s company offers. Many advertisers focus their efforts on 50 to 500 keywords. They tend to think of the same, fairly obvious ones for their field – so, according to the laws of supply and demand, those terms get bid up in auctions.

Murthy takes advantage of that relatively limited vocabulary by sidestepping it, thus potentially delivering more bang for the buck. Thanks in part to the company’s BroadSword software, it boasts about seven million “cheap” search terms. Rather than being limited to 50 or 500, Pinstorm can position clients with 10,000 to one million search terms.

Geographical region and search engine also has an effect on the cost of advertising. In some parts of Asia, it is more expensive to advertise on Yahoo! than Google. In China, particularly, domestic search engines have more of an audience than Google, which affects advertising as you would expect it to. For those willing to consider search engines other than Google, it is worth noting that “You will find sets of words highly bid up on Google that are virtually free on Overture,” according to Murthy.

And speaking of search engines that are competing with Google, Yahoo! is changing its approach to advertising in an effort to boost its effectiveness. It plans to serve up ads to users based on their surfing behavior on its site. In short, it will be using more than keywords.

“The new, new thing at Yahoo, even though we’ve had variations of this, is getting much more into behavioral targeting,” explained Yahoo! executive VP Greg Coleman in a talk with Reuters.

The behavior the company plans to target includes search queries, movement through Yahoo! sites, and the specific ads clicked. This represents a change from Yahoo!’s usual approach, which targeted advertising based on customer demographics or geographical location instead of behavior.

One nice aspect of the new system is that it lets Yahoo! decide on the fly what ads would be most appropriate to serve to any particular user as he or she works their way through the site. For example, a user searching for information on cars might be sent an auto ad, according to Coleman. While monitoring of this kind can raise privacy concerns, Coleman emphasized that the targeting would be done anonymously based on behavior.

Of course, for advertisers, there is a catch. This kind of placement will cost more. That shouldn’t be surprising; the right ad at the right time and the right place is much more valuable – in a sense, it is the real estate seller’s equivalent of “location, location, location.”

While Google has been in the spotlight more than Yahoo! for its innovative efforts, this move by Yahoo! makes a lot of sense. It is likely to be watched closely by the other search engines. I would not be at all surprised to see it imitated, once it has proven successful.

You may remember an article (http://www.seochat.com/c/a/Search-Engine-
News/Is-Google-Going-into-the-Classifieds-Business/
) I wrote recently about Google Automat. Google applied for a patent that made it look very much like the search engine giant was trying to get into the online classified ads business, in a way that would rival the likes of eBay and craigslist. It certainly made a start with Google Base. Therefore, it should come as no surprise that Microsoft is developing a service of its own to enter this competitive arena.

The service is codenamed Fremont, and it is supposed to be tied into other offerings from Microsoft. For example, if someone is looking for a particular item, and they use Microsoft’s instant messaging service as well, they might be able to put in an alert so that the IM would send them a message if someone is offering the item they want for sale. Likewise, if they are selling something, they could get IM alerts if someone is interested in buying it.

Some of the options Microsoft is considering take advantage of social networks that are already in place. For example, one possibility might be that users can offer an item for sale only to members of their buddy lists. Or they might be able to offer an item only to those who work at the same company or attend the same university, based on email addresses. 

Another good feature Microsoft hopes to integrate is geography-based searching. If you’re looking at buying or selling a car, for instance, you would probably prefer to carry out the transaction with someone in your own area. This may be true of any large, bulky, hard to transport item. Taking a wider look at the kinds of items that typically show up in classified ads, being able to do geography-based searching becomes even more important with things like jobs, houses, apartments, and – one of my favorites – yard sales.

The service is not available yet, however. It is currently being tested by Microsoft employees. Watch for a broader, more public pilot of the service sometime in 2006, probably sooner rather than later.

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